Friday, March 12, 2010

Panning Planning?

Longtime KPC friend JS writes:

Many Transportation planners are bemoaning the lack of increase in the federal gas tax for the past 15 years, and the infrastructure industry has said it is doubly bad because not only do we have inflation, but we now have electric vehicles/hybrids and in general more fuel efficient vehicles. The planners add on observations the new steep decline in driving shown on page 9 of the VMT trends. Therefore the Transportation/ Industrial complex is banging their chest for new funding.

“Tide” light rail line has now escalated to nearly $340 million. This is up nearly one-half from the estimates made when the project was approved by the Federal Transit Administration. According to federal documentation, the line will carry 7,100 daily passengers in 2030. This means that the capital cost alone will amount to an annual subsidy of approximately $6,500 per daily passenger (using Office of Management and Budget discount rates), plus an unknown additional operating subsidy.

Translating $6,500 into per trip and generously applying the full trip length that results into 365 days and the full 7.4 mile rail corridor yields, a $17.64 per rider and $2.40 mile for just the capital cost, compared to the $1.50 proposed fare per trip. It would seem that this huge market distortion cannot be increasing welfare when taking into account taxes or monetary devaluation needed to pay for this monument.

So my point? The payers into the highway trust fund must notice the numerous diversions that are changing the “user fee” into “general tax” distributed by the politician. The road users are also asking themselves each day if they think that an increase in user fees will change their driving experience. Transportation planners need to look more at the markets than the micro mechanisms that are failing their current product lines.